The Urban Institute just announced its publication of a new book that offers an agenda of reform for working Americans. Responding to the disheartening fact that wage inequality is widening and that many federal policies discourage some people from working, the book offers a strategy for how government programs should be reformed to encourage work and reduce economic inequality.
In Making America Work, Jon Forman lays out a comprehensive national strategy for improving the economic benefits of employment and promoting greater economic justice. His recommendations follow crisp and thorough discussions on how market forces and government actions combine to determine the current rewards from work.
"America works because it has achieved a balance between our desire to reward work and our concerns about economic justice," writes Forman, a professor of law at the University of Oklahoma. "But America could work even better."
Showing how, Forman sets forth a slate of recommendations to reform America's tax, welfare, Social Security, pension, and health care systems, along with its labor markets.
Forman discusses who in the United States is working, how the compensation system operates, how government decisions affect this system, and how far legislators and policymakers should go to reduce the unequal distributions of income and wealth.
Forman maintains that when the free market's "distribution of economic rewards is unfair, it falls to government to adopt policies that promote greater economic justice. . . . Governments influence market outcomes through a combination of regulation, spending, and taxation."
It is clear that Forman's thinking gets at some of the issues explored in this blog-community about labor, wages and the growing challenges facing working people in the cities of America.
According to Professor Forman, current policies reduce economic inequality by about 20 percent, but that still leaves America with a high level of economic disparity.
Among Forman's ideas for reform:
* Making Taxes Work: Get rid of inefficient tax subsidies and reduce tax rates on earned income. Restructure the earned income tax credit. Replace personal exemptions and standard deductions with universal grants. Abolish the tax system's many marriage penalties. Simplify the tax system and reduce compliance costs. Ultimately, integrate the income and Social Security taxes into a comprehensive income tax system.
* Making Welfare Work: Reduce the high marginal tax rates on earned income for low-income Americans and eliminate the welfare system's many marriage penalties. Provide more child care assistance for low-income parents. Eventually, merge the tax and transfer systems into a single comprehensive system with low rates on earned income.
* Making Social Security Work: Reduce the progressivity of the Social Security benefit formula while expanding Supplemental Security Income. Raise the early and full retirement ages. Tax Social Security benefits like pensions. In due course, replace Social Security with a two-tiered system, combining basic Social Security benefits to all older Americans with earnings-related individual accounts.
* Making Pensions Work: Expand pension coverage and pay retirees in proportion to their productivity. Require pension plans to be age-neutral. Gradually make universal retirement savings accounts mandatory.
* Making Health Care Work: Expand health care coverage, strengthen the connection between health care and work effort, and restructure health care markets. Provide nearly universal health care coverage at a reasonable cost and with a minimum of work disincentives.
* Making Labor Markets Work: Vigorously enforce the laws against employment discrimination. Reduce incarceration levels. Expand education and training opportunities. Modestly raise the minimum wage and index it for inflation. Expand the unemployment insurance program. Strive to make full employment a reality.
Lots to think about here, to say the least!
But then, it is past time for us to think and, even more, to act to create a more equitable workplace for all Americans. Maybe what we need is a movement of compassionate, committed people who will not relent until change comes for working people in every corner of our society.
For the record, Forman is the Alfred P. Murrah Professor of Law at the University of Oklahoma and vice chair of the Oklahoma Public Employees Retirement System.
Before entering academia, Forman worked in all three branches of the federal government, most recently as tax counsel to Senator Daniel Patrick Moynihan.
Making America Work, by Jonathan Barry Forman, is available from the Urban Institute Press for $29.50 (448 pages, ISBN 0-87766-731-4). You may order online at http://www.uipress.org/, call 202-261-5687, or dial 1-877-847-7377 toll-free.
[The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance challenges facing the nation.]
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